1. Mergers & Acquisitions A Risk Manager’s Prospective Presented by Shevaun Macari Director – Insurance Risk Management ABB Inc. North America Presentation to RIMS Chapter May 14 th, 2013

2. Overview – M&A Trends M&A activity peaked in 2007 Downward spiral in 2008 and 2009 Slight uptick in 2011 Slight dip in 2012 – media tells us “buyers are getting choosy”

3. As a Risk Manager – Where do you begin? The “Basics”

4. Does your company have an M&A Team? Introduce insurance risk management function to M&A Team. Does your company have a written M&A policy handbook or set of guidelines? Connect with other functions, i.e. real estate, tax, legal, safety…

5. Electronic Data Rooms – not all are the same; is there a roadmap? Can you do it on your own or do you need help? Role of consultants, brokers, lawyers (with respect to insurance) Stay “at the table” to explain everything from EMRs to environmental coverage

6. Cost of Risk Analysis ….can the TARGET show five years of COR on one bar chart? Enterprise Risk Management – does TARGET have process? Heat map? SOX Compliance – are there imbedded into any of the TARGET’s SOX controls insurance related issues? If so, what are they?

7. The Checklist – we all have our own … but have you cross checked yours against anyone else’s? How are your findings being presented to management? Can you present?

8. What kind of deal is this? Different deals … different concerns by a risk manager … Example – in a stock deal where you are buying assets and liabilities – you need to know about previous insurance – where are those policies? Archeology resources

9. A few words about divestments Surety bonds – get them replaced by Buyer’s surety AT CLOSING! Ability to charge back deductibles/ retros/ captive insurance costs – Make sure there is very specific language in transaction document allowing for this! Know your colleagues (make friends, not enemies….)

10. A few words about taking a minority ownership position in a company Due diligence still needs to be completed Will they have their own insurance? Make sure it is primary to yours Analyze coverage under your insurance program in connection with your liabilities and theirs

11. A few words about acquiring JVs Due diligence still needs to be completed Will they have their own insurance? Make sure it is primary to yours Analyze coverage under your insurance program in connection with your liabilities and theirs

12. What keeps risk managers awake in connection with M&A work?

13. 1. What haven’t they told me? 2. Think … how did I phrase the request? How did they respond? Not that people are hiding things but …. 3. Can you explain (again) how you are accruing for workers’ comp? 4. FDA Warning Labels/Issues? 5. Any product recalls? 6. Cybertech …. EPLI

14. Ok … the deal’s done …. Integration Challenges:

15. Integration begins prior to close Culture of both organizations – how to blend together? Who’s in charge? Can we take action at closing? Or at what point? Do I have a cooperative speaking partner? Do they have a risk manager?

16. Can you do it on your own or do you need help? On to the next check list … integration activities …. Stay on it … Combining insurance programs is not about saving money…raising limits, broader coverage and more consistent approach to risk control in all areas

17. A few thoughts about certificates How many certificates of insurance do you need immediately? Can we see what form(s) they used? Same limits on each cert? Who requests them going forward? Contract reviews? Lease reviews?

18. A few thoughts about surety bonds Who requests them going forward? Compliance with approval process? Any issues with ‘your’ surety vs. ‘theirs’?

19. Questions?